Level One Bank eyes growth with entry to GR market

GRAND RAPIDS — A strong marketplace combined with recent consolidation involving community banks lured Level One Bank from its base in suburban Detroit to the Grand Rapids market.

The Farmington Hills-based Level One Bank plans to open a branch in mid-November on Grand Rapids’ southeast side, becoming the latest bank to enter the marketplace.

As with the other banks that have opened in the area, the privately-held Level One Bank views Grand Rapids as a thriving market with low unemployment, a growing population and a strong business base.

“As a community bank, we’ve been fortunate to have some success and we believe our style of banking and our business model will resonate well certainly in the Grand Rapids community,” said Level One President and CEO Patrick Fehring. “We see a market that is very dynamic. It is a market that’s growing and it is a market of entrepreneurs, and that is a place where we fit — a market where there are small and emerging businesses that are growing and thriving.”

Fehring, the former regional president in southeast Michigan for Fifth Third Bank, was among a group of commercial bankers and business leaders who formed Level One Bank in 2007.

Level One Bank today has 10 offices in metropolitan Detroit with $1.04 billion in assets as of June 30, $917.8 million in deposits and $882.3 million in net loans, according to a quarterly financial report filed with the FDIC. Level One in February closed on the $17 million acquisition of the Bank of Michigan, also based in Farmington Hills.

As a primarily commercial bank, Level One works with businesses needing credit of $10 million or less, which Fehring describes as the bank’s “sweet spot.” The bank can syndicate commercial loans for clients that need more, he said.

The opening of a Grand Rapids branch in a former PNC Bank office on Burton Street at Breton Road will represent the bank’s initial investment in the market, Fehring said. Based on how well business develops in Grand Rapids, and following a template for building the bank over the last nine years, Level One plans to add other locations in the market in the future, he said.

“As that operation grows, we’ll continue to support and invest in the operation there with additional team members (and) with additional branch locations,” Fehring said. “There are several communities on the west side of the state in that greater Grand Rapids area and we already have some thoughts and ideas that will lead us into the future.”

GROWING OPTIONS

Level One is the latest bank to seek out a position in the Grand Rapids market. Earlier this year, Sparta-based ChoiceOne Bank, which has traditionally focused on rural markets north of Grand Rapids, opened a lending office in the city, as did Ithaca, Mich.-based Commercial Bank. They were followed in April by Kansas City, Mo.-based Commerce Bancshares Inc. (Nasdaq: CBSH), which opened an office on Monroe Avenue in downtown Grand Rapids and over time wants to add more locations across the region.

The Evansville, Ind.-based Old National Bank also seeks a larger role in the market, which it entered in January 2015 with the Founders Bank & Trust acquisition.

Old National’s Michigan CEO, Todd Clark, told MiBiz in August that the bank envisions doubling its presence in the Grand Rapids area within three years. The four offices in the market that came with the Founders acquisition are “not enough,” even as retail and commercial customers today increasingly do their banking electronically, Clark said.

Grand Rapids has always been an attractive market for banks, said Rajesh Kothari, managing director at Cascade Partners LLC, a Southfield-based investment bank.

The present economic strength and growth occurring in the market today make it even more attractive, Kothari said. He expects more banks that are not presently in the market to target Grand Rapids and establish a presence.

“People are seeing the opportunity there. I don’t think that trend is going to abate,” Kothari said. “It’s always been a thriving marketplace. The difference is that, comparatively, its strength is shining even more and the size of the marketplace has gotten much larger.”

OPENING IN THE MARKET

Grand Rapids is the second-largest banking market in the state. As of mid-2015, the most recent period for which statistics are available, the Grand Rapids-Wyoming metropolitan area had 32 banks with a deposit base of $19.55 billion, according to the FDIC’s annual Summary of Deposits. Deposits in the Grand Rapids-Wyoming market grew 9.4 percent from mid-2014 to mid-2015.

Statewide, deposits grew during the same period by 7.6 percent to $190.5 billion, according to the FDIC Summary of Deposits.

As Level One Bank seeks to pursue a bigger share of the Michigan banking market, Grand Rapids was the logical choice, Kothari said.

“They want to be a player in the state,” he said. “If you want to be a player in the state, you have to be in Grand Rapids.”

Given the potential to create a presence in the market and contribute growth, Level One Bank directors believe now was the time to reach outside of the bank’s home market in Southeast Michigan. Deal activity over the last two years involving two community banks merging into larger institutions also created opportunity for another community bank to enter the Grand Rapids market, Fehring said.

The recent consolidation includes Founders Bank & Trust’s deal with Old National and Chemical Financial Corp.’s acquisition of Lake Michigan Financial Corp., the parent company of The Bank of Holland.

“We are certainly aware there is great competition in the marketplace there and we respect the competition, but we also think there is an opening at the same time given what has occurred with the consolidation,” he said. “As a Michigan-based organization, we’re confident we’ll do well there.”

The bank is presently seeking to hire up to 13 people, including commercial lenders, mortgage loan originators, business development officers, a branch manager and other branch personnel.